The professional services marketplace has changed
dramatically over the last few years. This is the result of both (1) the current economic turmoil and (2) efforts by many service firms to
restructure in order to meet the expanding
demands of their clients.
Examples of these expanding client demands include:
·
The need for greater complexity in executing many
professional service offerings;
·
An increased client sensitivity to the price of services
being offered;
·
Greater demands to improving project performance,
including expecting shorter delivery times and higher project quality; and
·
More access
to the best “hands on” expertise in the firm. This is especially true for
assisting clients expand into smaller & emerging markets to create new
opportunities for their growth and profitability
.
The good
news: Firms that do respond effectively to these growing client demands could
see significant new opportunities to increase their own growth and profits.
This will be especially true in key professional
service market segments such as consulting;
information technology; audit & tax; law firms; and IT, process, &
telecommunications outsourcing service providers.
In our consulting efforts, Bonocore Technology Partners (BTP) identified four high priority areas and twelve actions that service firms
should take in meeting these needs. We
believe that adopting new innovation in
these twelve areas can create significant
market differentiation in the current demanding professional services marketplace.
The high priority areas where new innovation and
market differentiation can be achieved in many firms include:
1.
Implementing more effective client management techniques;
2.
Adopting higher project
quality standards and implementing greater project efficiencies in all
service delivery processes;
3.
Managing the firm’s key knowledge assets (including both talent and intellectual property)
more effectively to expanded client access of these limited assets to many more
clients; and
4.
Implementing operational
excellence techniques in all service support processes in the firm.
How effective is your firm in implementing
best practices in these areas?
Many professional service firms
have a long way to go to meet the needs of the marketplace. Assessments we have
conducted found that most firms can benefit from an evaluation of your present operations and the development of a comprehensive action plan to improve
operations as well as minimize any negative impact that may arise in today’s marketplace.
Based on our experience, there are twelve key steps that should be included
in this plan for most professional service firms. They are:
1.
Educate
firm management on the characteristics of the new “Client Demand Driven Marketplace” and develop management consensus
around the changes needed in your organization to meet these market demands.
2.
Create a
firm-wide commitment to be much more nimble, efficient, and responsive in helping
your clients in their efforts to simplify, streamline, scale, enter new lines
of business, and restructure company operations.
3.
Centralize
the service delivery operations with a view toward a more global organization
& service delivery strategy. Restructuring into a global services &
delivery model is an important step in meeting present market demands for a higher
level of client service. A global structure can help significantly in
effectively executing steps 4 through 12
(defined below).
4.
Provide
greater access to the best knowledge assets in the firm to many more clients.
Executing this plan can drive additional revenues and improve your firm’s
market differentiation by permitting greater access of this knowledge to a
larger number of clients.
5.
Create a
more efficient service delivery model. Standardizing your service delivery
processes (to the greatest extent possible) & centralizing your key
knowledge resources, can go far in meeting to clients present expectations. The ultimate goal should be more effective
& efficient project management with higher project quality.
6.
Improve retention
rate of the firm’s key talent. Our
research tells us that centralizing key resources can not only improve revenue
but also result in higher key talent retention. Examples include more effective
deployment on client projects & sales efforts and a greater awareness of the
support required to leverage these resources (e.g. resource training).
7.
Implement
higher project quality project standards. Client expectations are requiring
that service firms improving project & process quality. Higher quality
standards can also reduce project cost and shorten delivery times. This can
also result in greater client satisfaction and generate additional fees with
“follow on” projects.
8.
Implement
a more effective sales & marketing strategy. The objectives are to identify
who are your best clients & how you can improve the effectiveness and
integrate your sales and marketing efforts. One example is to more effectively manage the entire selling cycle to drive greater
sales. The goal is to increase the number of wins as a percentage of
opportunities.
9.
Develop a
more flexible approach for pricing your services. The successful services firm
of the future will present a number of service pricing options to their clients.
This will be necessary to answer the client’s growing sensitivity to fees and their
desire for more flexibility in pricing. When structured correctly, a flexible
fee strategy can also help to shorten today’s longer sales cycle time and drive
down cost. An example includes reducing the number of “tough negotiation” sessions
with your clients which generally result in lower fees. You should also keep in
mind that, in many cases, offering flexible pricing options may be in conflict
with your ability to develop certain services and manage certain projects.
10.
Restructure
your present support organization including policies, procedures, & systems
to more effectively support you in today’s marketplace. This may likely
require centralizing performance management and supporting systems. The goal is
to improve overall operational effectiveness and provide greater business
intelligence information to meet client
demands.
11.
Understand
your true profitability by service & by client. In most cases, this will require centralize &
standardize client service & delivery data (including data across all
business lines and geography). Service
firms should better understand the
true cost of delivering each service and managing each client. This knowledge
of service & client profitability will continue to grow in importance as
each firm develops a better understanding of their “profitability drivers” and
creates new competitive pricing alternatives.
12. Develop the capability, scale, and
expertise to effectively enter smaller growth markets. Many potential
clients need your firm’s skills to help them create new opportunities for
growth. However, most professional service firms will require a very different
service model to be successful in entering these smaller but growing markets. This
will require working in an environment of providing your services to a larger
number of smaller clients. This will necessitate:
a. Reorganizing business units across a wider
geographic area; and
b.
Restructuring
your services and service delivery model to be more scalable and efficient
to maintain your profitability in an environment of providing your services to
a larger number of smaller clients.
The future success of each
professional service firm will depend on how effective they are in implementing
best practices these twelve areas. Naturally, specific solutions in each
area will vary to fit each firm’s situation.
Our firm provides consulting counsel
in helping professional service firms to evaluate their present situation and implement
an action plan meeting the changing needs of the marketplace.
For questions, additional
information or to schedule a risk free assessment of how your firm is
positioned for future success, please contact Joseph J. Bonocore at
415-924-9992 or by email at jbonocore@bonocore.com.
